Thursday, November 8, 2007

21 Tips to get the most out of Renting

In many parts of the world including the Australian state of Victoria, where I have two of my rental properties, rental property demand is at a massive high at the time of writing this article.

For people renting residential properties this can mean consistent rent increases for those already in properties and a shortage of properties on the market available to rent.

In this the following three article series I’ll address the following topics from my own experience as a tenant, a real estate business owner, a property manager and as a property investor.

1. How to make yourself the most desirable tenant when looking to rent a property
2. How to negotiate the lowest price for your desired rental property
3. How to keep rental increases to a minimum once you’re in a rental property

Notes, the following terms are interchangeable:
• Renter / tenant
• Landlord / property investor / property owner

Part 1

As a renter or tenant, here are some ways you can make yourself more attractive to the property owner or property manager when you’re looking for a property:

• If you’ve rented a property before, always ask to get a reference in writing from your previous landlord or (even better) from the property manager who you rented through. I say that a reference from a property manager is better than one from a private landlord in that it’s harder to fake a reference from a legitimate real estate company. The best rental references discuss the condition you kept the property in while you were living there, the condition it was in when you left and your consistency in paying your rent on time. Best of all is the final line where your property manager (hopefully) states that they would love to rent to you at again at any time in the future.
• If you have a pet be prepared that many investors may not even want to consider you for their property, however written pet references (note multiple if you can!) from previous landlords or property managers will speak highly for your case. Also – if your pet is small or presents well, a photograph attached to your application doesn’t hurt.
• In some areas (not Tasmania where the bulk of my rental properties are) you are able to pay a voluntary increased bond or “pet bond” to further guarantee that your pet will provide no long term damage. Offering to do this is a good sign of your intentions to a property owner.
• If you’re young sadly at times this can make you as undesirable as a Doberman dog! I know this personally from renting while I was 17 years old at University. To overcome this, attach with your application a few written referees from the most responsible adults you can find (teachers, employers etc). Remember here that putting down your parents or relatives as references doesn’t really hold that much sway as they’re obviously going to be biased!
• Why do I keep going on about written references? For one, they look good but for two, they save a property manager some of their valuable time. If a property manager has ten applications to check and yours is partly done because of the written references – you can come across as a more appealing tenant to the time poor property manager.
• If you really want a property and believe there is going to be competition or you simply think that the property is good value or will be hard to find again, consider offering $5 a week (or any amount you like) more in rental. This obviously isn’t going to be the answer for everyone, but is an option. (More on how to get the rental down in part II!).
• Present well when you inspect a rental property. A property manager or property owner only has limited information to go on when deciding which tenant to chose. One of the things that will be a factor (regardless of whether they admit it or not) will be your presentation and the first impression you make at the inspection.
• Remember that property managers may look to see how well you take care of your car as an indication to see how well you’ll take care of the property (NB. McDonalds wrappers all through the car – not a good sign!)
• Ask the person in charge of renting the property if there is anything you can do to make your application more desirable to the property owner. Examples of this may be: length of lease, gardening, presence of pets, supply of references / guarantors etc.
• Where possible I always recommend that if you’re unsuccessful at getting a rental property that you ask why. For anti-discrimination reasons you may not find out, but it never hurts to ask the question because it could lead to you being more successful next time.
• When you do apply for a rental property, have everything ready in advance. If the property manager has five applications to check and yours is incomplete it’ll go to the bottom of the list! A great idea is to have all the information photocopied and ready to hand over including credit checks, references, photo identification, birth certificate etc.

Part 2

In this day and age in many areas it can be difficult but not impossible to negotiate on the rental of a property. In your area there may be a high vacancy rate which puts you as the potential tenant at an advantage.

Here are some ways to negotiate when you rent. This may be to either attempt to save money on the rental price or to maximise your chances of being the number one picked tenant.
• Ask what length of lease the landlord would prefer and then submit your application with that lease length. Asking to see if the landlord wants a long term tenant gives you the advantage of being able to offer a 2 year lease instead of 12 months (if it suits you) which may put you one step ahead of the other applicants who haven’t thought of this.
• If gardening is included in the rental amount, offer to do your own gardening and provide (yes, you guessed it) a written reference to say how immaculately you maintained your last garden.
• Being ready to take the property immediately may put you in a position where you can negotiate more easily. To a property investor, any vacancy means a zero percent return, so if you’re ready to move in tomorrow – sensational! Consider stating that you will take the property immediately even if you don’t need it for a few days to put you in a stronger negotiating position and gives you a little breathing room to move in!
• I once bought a property specifically for one set of tenants because they offered to pay 6 months rent up front. It was a great bargaining chip for them because, as a property investor, it was money straight off my mortgage. This can be used as a negotiation strategy for any tenant (who has the funds at hand) and while you may not pay 6 months rent up front, two identical applications from tenants can be quickly separated if one wants to pay say 12 weeks rent up front instead of 4 weeks.
And don’t forget to go through part 1 and make sure that you present as the most desirable tenant!

Part 3

Of course most property investors want to maximise their return on a property, ie: they want to get as much money as they possibly can. However, it’s not rocket science to figure out that most of us also want to attract and retain a quality tenant and some investors will sacrifice some of the higher end of their return to do so.

If you’re in a property, here’s a way to make yourself a more valuable tenant and to try and avoid some of the rent rises:
• Be a long term renter. I know as an investor myself – I’m the most lenient on rental increases to tenants who have been in the properties the longest.
• Be nice to your property manager (they have a lot of sway as to whether an owner renews leases or increases rent and to how much!)
• Keep the home in great condition on rental inspection date. Working in property management through my real estate career I can’t believe the condition some tenants leave their properties in on rental inspection date. While I’m certainly no Miss. Neat and Tidy every day at my own house – on those 2 - 4 days a year, make an effort and it won’t go unnoticed.
• Be a problem free tenant. Most investors I know will be far more likely to extend a lease to a tenant (and sometimes without a rent increase if the rent is consistently paid on time).
• Don’t be a “difficult” tenant. Now this sounds a lot like the above, but a difficult tenant to a property manager can mean a whole swarm of things. Some of my big “no-nos” are as follows:
o calling up about “emergency” maintenance at 2.00am when it’s just a broken cupboard handle (extreme example, but trust me it has happened)
o making it difficult for trades people to access a property to complete maintenance
o insisting on being present for routine inspections (yes, we know it’s your home, but when a property manager has 20 inspections to do in a morning coordinating each one personally is impossible!)
• Where possible (and appropriate), treat the property like it’s your own. Don’t get on the phone complaining about every loose washer or blown light bulb. Just let your property manager know on the next routine inspection if you’ve replaced anything minor like this. (NB. Before even considering attempting anything major, even if it’s in an attempt to help, call the property manager or owner first)

Most of what is written in this three part series is common sense. For new renters and those looking to capitalise upon their renting experience I hope you’ve found one or two tips to help you on your way! Good luck with your renting experience.

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